Why Property Renters/Lessees in Denver Should Choose Hoff & Leigh
In the era of e-commerce and sweeping changes to the marketplace, there has been a dramatic shift in how and where we conduct business. More people are turning to the internet for goods and services, setting off new parameters for commercial businesses in the U.S. This has impacted the commercial real estate market in certain regions of the country as well. For businesses in Denver, these changes have brought new opportunities and economic growth to the region, but not without some challenges.
The shifting needs of a growing population have caused a surge in the amount of new commercial development projects in Denver. Yet, vacancy rates for commercial businesses have remained low while costs continue to rise, indicating there is still not enough space available to meet the shifting demands of the market. According to LoopNet, the amount of new commercial property development projects in 2017 increased by 20-30%, depending on the type of commercial construction, yet a shocking 51.6% of that new construction was already pre-leased. This means a continued shortage of available commercial property in the Denver area.
For companies wanting to lease or renew commercial space, understanding the fluctuating demands of Denver’s commercial real estate market can be difficult. Finding the right location and property for your business, and negotiating the best terms for your lease can be a daunting, and often frustrating process. Hiring a reputable commercial real estate broker with well-established local roots is a critical first step for businesses in and around the Denver area that shouldn’t be overlooked.
Our team of experienced commercial brokers at Hoff & Leigh have extensive insight into the local market and a well-cultivated network of contacts with landlords and commercial property owners. They can help you understand the current market and locate available properties in your area. They will also negotiate the best terms for your lease to match your business needs now, and in the future.
Commercial Tenant Challenges in Denver, CO
Commercial space generally falls into three categories, retail, industrial, and office space. Each come with their own unique challenges and particular obstacles for commercial tenants in the Denver area.
Retail businesses have been growing in Denver, with over 1.6 million square-feet of new construction underway in 2017 alone- the highest since 2009, with 330,000 square feet of that going towards the Denver Premium Outlets project in Thornton. But with much of the new construction pre-leased, vacancy rates are still between 6-7% and commercial leases continue to rise by as much as $1.00 per square-foot. Specialty grocery stores and social-entertainment venues have replaced big fitness centers and gyms at local retail centers, in part from requiring less space to operate, keeping costs low and affordable for smaller, local businesses. However, large chain stores are still Omni-present.
Denver is used to seeing high vacancy rates for office space. Rates in the two-digits are pretty normal. Both vacancy rates and average asking prices for leases rose slightly in 2017 and will likely continue to rise due to the amount of new construction hitting the market in 2018, but the strong pre-lease trend continues, with 4.5 million square feet of new office construction, including the 1144 15th Tower project in downtown Denver already under lease. The new office space expansion in Denver may have more to do with location and design than need, which is why there was no shortage of interest in the 15th Tower project in downtown Denver.
Amazon’s new Distribution Center in Aurora added 1 million more to the 5.4 million square feet of new industrial space that entered the Denver market in 2017. The Denver metro area has expanded alongside the rising tide of e-commerce, sparking a need for more service centers in the region, and giving a big boost to the industrial market as a result. Although the need for more industrial spaces has grown, so has the cost, which is why most of these spaces are being built specifically for or by a specific chain or industry – like Amazon, and other large retailers in need of similar local service centers for their stores.
Finding Help in a Changing Market
The challenges of a changing marketplace fluctuate with the population and economic shifts that inspire them. These shifts are often hard to anticipate, and easy to miss, especially when you are new to an area or business needs change. Staying on top of the constant fluctuations isn’t always possible. Working with a local brokerage office can mitigate much of the unsurety you face, and alert you to circumstances you and your company stakeholders may not be aware of. The collaborative, integrated process and team approach we embrace has allowed us to build a strong network of connections with landlords and commercial real estate owners who may have commercial space available that is not yet on the market.
We also keep tenants connected with every step of the process, working in collaboration with our team of experienced brokers who use comparative analysis and other marketing tools and strategies to help you understand and address the challenges of the changing marketplace.
Negotiating the Best Lease Terms
Our commitment is to our clients. We represent your best interests during negotiations to ensure the terms of your lease agreement benefit your company and meet the requirements you’ve set forth. But there is much more to this process than just negotiating the best lease rates. Other important, less-transparent considerations can greatly affect your business now and in the future. Understanding the subtler, more nuanced details of an agreement and how to negotiate for the best outcome is something we do best. We will help to identify any unforeseen pitfalls or hidden costs that could occur in the future and negotiate the best terms for your business needs now and as they change overtime.
Even with the high demand for commercial property in Denver, there are certain advantages to leasing that still make it worthwhile. There is less expense upfront, tax incentives, and flexibility that investing in commercial real estate won’t offer. Let us help negotiate the best terms and secure the right location and commercial space for your business to thrive with our extensive network of connections and understanding of the local market, and our proven track record for success.